The Reason Of Korean Banks To Enter The Chinese Market And Development Strategy Research

It has been almost twenty years since Korea Exchange Bank, which is the first Korean-capital bank in China, set up the Beijing representative office. Some initial success has been achieved during the two decades. Ten Korean-capital banks had established 60 branches in 13 major cities in China by the end of 2010. Among the ten banks, five of them had funded the PRC legal identity, which has taken a great proportion among foreign-capital financial institutions. Now Korean-capital banks are playing a decisive role in the foreign-capital banks.On the occasion of the 5th anniversary of gaining membership of the WTO, our financial market had fully opened to foreign-capital banks in Dec 11th,2006. From then on, foreign-capital banks started to enjoy the national treatment. This also brought the prosperous era to Korean-capital banks in China. The amount of Korean-capital banks increased rapidly, in the mean time various types of business and customer groups are expanding. While the huge opportunity has been brought to Korean-capital banks because of the openness of the market, great challenges also await among the other foreign-capital banks and Chinese banks.This article is written on the basis of summarizing the development history and current situation of Korean-capital banks in China, and combining the domestic and foreign studies of multinational banks’ overseas investment theories, then analyzing intensively the reasons why the motive of Korean-capital banks went into China, then studying the development strategy and comparative advantages, so that to have a in-depth knowledge of Korean-capital banks as a particular economic subject. In short, this thesis includes development situation, motivation of entering China, development strategy and comparative advantage of Korean-capital banks in China.First of all, this paper elaborates the development situation of Korean-capital banks in 5 aspects:development history, location study, type of organization, operation situation, and business scale, aiming at a multidirectional research result of the development status.Secondly, by study the fellowship of customer, market opportunity, scale economy, financial regulation and supervision, geographical distance, this paper brings forward a hypothesis of Korean-capital banks’ motivation of entering Chinese market, and tests the hypothesis by Econometric method. The result shows that the major reason for Korean-capital banks to enter Chinese market is to follow the Korean native customers, not to relate to our market opportunity. In addition, the motivation was also influenced by active financial environment, lower financial risks, loosen financial supervision, and also economic crisis.At the end, by using SWOT analyzing method on Korean-capital banks, this paper summarizes the development strategy from 6 aspects:market, product, branding, region, business and management. Through contrasting the Korean-capital banks and other foreign-capital bank, this paper conclude comparative advantage and disadvantage of development in China for Korean-capital banks.